Learn key information about a credit score of 312 how it's calculated, what loans you can obtain, and what you can do to improve your score
A credit score is needed for you to be able to get a loan or credit. The reason behind this is because it will help financial institutions to determine your creditworthiness. They will also see every loan that you made and the payment history that you have. Find out more about it by reading the information below.
Credit scores are calculated based on the proprietary algorithm. This will include the person's outstanding debts, payment history, and the length of the individual's credit history.
Credit scores can range from 300 to 850. The higher the individual's score, the lower the risk. People who have lower credit scores are considered high risk, which will make lending companies ask for more requirements.
About Fico scores
Fair Isaac Corporation is the one who established FICO, and it is one of the most commonly used credit scoring systems today.
According to FICO, 90% of the most reputable and respected lenders today are making decisions according to this kind of credit scoring system. Get to know more about Fico scores by reading the information below.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
What does it mean to have a credit score of 312
The finance industry begins to count credit score from 312. There is no credit score below 312. In the finance industry, individuals with a credit score of 0-349 are said to have not established any credit score that will give them a credit history required for obtaining a loan. Most borrowing requirements are likely to ask for credit history where credit score is standardized and is used to determine the qualification for a loan application.
Credit score valuation
Sometimes an individual may be having a good credit score, which is above 580. However, due to the likelihood of borrowing and failing to repay the loan on time, the credit score goes down. There are circumstances where your credit score can go down up to 312 even if you had it above the mark. Financial, business, employment and investment statuses are dynamic to everyone. Your credit score can fall, and this will affect your credit history. However, if this happens, it is time you tried taking drastic financial steps.
How to improve your credit score from 312
Staying above 312 credit score is the only way financial institutions can listen to you. There are several ways you can improve your credit score depending on how bad it is. The worst credit score is below 350. To repair this credit one needs to set up a repayment pattern. Avoid using shortcuts such as using the credit repair companies that promise to raise your credit score within a week. Natural credit repair, through responsible handling of loans is the best and approved way of staying with a healthy credit history.
Credit cards you can get with a credit score of 312
Applying for credit cards with a credit score of 312 can be a challenge since this is a very low score.
Credit card companies prefer approving applications from people with a better credit score. But this does not mean that you no longer have a chance to have your own card. There are a few tips that you can do to avail of one.
Secured Credit Card
One of the best option that you have is to apply for a secured credit card. This will require you to deposit a certain amount of money, which will then serve as your credit limit.
Asking for Authorization
Another tip is to ask a family member to authorize you to use their credit card. Just make sure to only use what you can pay to avoid messing up with their own credit score.
Car loans with a credit score of 312
As you all know, one of the biggest factors in determining your chances of getting a car loan is your credit score. A 312 credit score can sometimes cause a person to have second thoughts when it comes to getting a car loan. But of course, there are financing companies who can provide you with the loan that you need for your dream car.
US Bank National Association
One of the companies that offer car loans with a credit score of 312 is the US Bank National Association. The company offers car loans to people who have a 312 credit score. But of course, their rates may become higher when it comes to getting a loan to buy the car that they want
Another company is SunTrust; wherein you can loan from USD 5,000 to USD 100,000. The rate can be as low as 1.99% to 5.04%, which will depend on the credit score that you have. SunTrust offers a single and a fixed rate plus they don't have prepayment penalties and no fees.
Mortgages with a credit score of 312
With a score of 312, it is almost impossible to be able to get a mortgage from banks or any other reputable lending institution. There are a number of other factors considered but with a credit score this low, you will have to adopt the non-conventional means of getting a mortgage.
You should look for online lenders. They are not concerned about your credit score, and they will have very easier terms and conditions for your loan. You may want to look at the government-sponsored mortgage offers available in your country. You may also want to try becoming a member of a credit union. Credit unions are not for profit organizations and the interest that you may be paying for mortgage loan would be very low.
Home Loans with a credit score of 312
People who are getting home loans with a credit score of 312 may have a hard time getting one. But getting your application approve is still possible.
Lenders are not only looking at your credit score, which means that even if you have a credit score of 312, you still have a chance of getting your application approve. Below are some of the factors that they are also looking into.
The capital is where the lenders can check if you have enough assets that can help you repay the loan that you are asking. Capital can be an investment or savings.
The lender will check your capacity of paying the home loan that you are applying. The capacity will include your employment history and your income.
Personal Loans with a credit score of 312
312 is the lowest credit score for which you can access a loan. There are very few options available at this score to obtain. Most lending organizations view you as an irresponsible person unable to meet his/her financial obligations. To make it worse, you get charged more to get credit facilities. So what are the options for you at this score?
Loans from friends or family:
Soliciting soft loans from your friends and family is the most convenient option for you. However, you need to formalize the terms of the loan to ensure your relations remain Ensure the principal amount, interest rate, monthly payments and repayment period are clearly stipulated in the loan agreement.
Loans with Collateral
You can approach shylocks for small loans while using your property as collateral. Ensure the valuation of the property use is almost of equal value with the loan you are getting. This is just in case you fail to pay and the lender decides to liquidate the collateral.
Peer to Peer Loans
This allows you to get a loan directly from another person. It is an online platform that enables you to access credit at a lower rate. The only downside is that you have to provide a lot of personal information for creditors to determine whether you qualify for their loans.
Things you can do to improve your credit score of 312
312 is the lowest credit score that most formal financiers can consider you for a loan. You risk being blacklisted by banks if your rating goes below this score. Therefore, it is necessary for you to make a deliberate effort to ensure your credit score improves progressively. A good credit rating improves the terms and rates you get for credit.
Pay your premiums on time
Late payments usually damage your rating. A late payment of even a day or week impacts on your credit scores negatively. You can set a reminder from your creditor or allow them to debit your credit automatically at the end of every month.
Pay debt instead of buying it off
Taking a loan to pay off another loan is not such a good idea. Some banks can offer you another loan on condition that they buy off the loan you owe to another financier. This practice can damage your score since you increase your debt and the period you are in debt.
Cut down credit card use
Overreliance on revolving credit especially credit cards drastically diminishes your rating. Your credit score can be affected by a high outstanding debt especially when looking for extra financial support.